Brazil scraps EV tariff break for Chinese carmaker BYD amid pressure from rivals
US, European and Japanese manufacturers combined to lobby for an end to favourable rules for Chinese kit imports
The exemption expired on January 31 and was not renewed, the South China Morning Post confirmed with multiple sources on Wednesday.
Companies such as BYD and Great Wall Motor will once again have to pay import taxes on vehicle kits brought from abroad for assembly in Brazil, reversing a policy introduced as a short-term incentive for new manufacturers entering the market.
In the semi-knocked down model (SKD), vehicles arrive almost complete and need little local labour, while the completely knocked down system (CKD) brings parts separately for assembly in Brazil but still depends largely on imported components.
Under existing rules, SKD kits face an 18 per cent import tax and CKD kits attract a 16 per cent duty. Both rates have risen to 35 per cent, a shift that sharply increases costs for manufacturers that rely on imported parts rather than full local production.
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The tariff break began in August after the government agreed to a request from BYD as the Chinese company prepared to launch large-scale manufacturing in Brazil.